$6000 Savings per year follow these 5 simple tricks

What would you do if you have $6,000 extra every year? Another extra holiday, buy some of your hobby items like a new camera, or some tech gadgets? Whatever your preference be – saving $6,000 every year just by changing a couple of habit and monitoring couple of area is not that hard. Even if you do not want to spend all this savings, do you know putting 6k extra in home loan account every year will shave off 6 years and $120k interest from a $700k home loan? Putting this aside in a managed fund will give you $120k compounded income in 10 year time – it’s well worth to look into it.

Online shopping

Whether it’s clothing or furniture or household items everything is available online and most of the time you can buy like 30%-50% cheaper compare to psychical stores. I will explain how it all works. Most of the products you see in the store of Australia are coming from China or India or Bangladesh or some other country where it is manufactured. If the store if large and sells a lot then lot of the time they bring it by themselves from the manufacturer. Small shops, however, buy it from a local supplier who in turn bring it from China. So essentially there is normally 2-3 hand transfer (manufacturer, wholesaler, dealer, retailer etc.) before you pick up the product from the store and each of the middleman in between claimed 5-10% profit that contributed to the price you paid. On top of that, these stores have the fixed overhead cost of store area, shop staff etc. On the other hand in eBay, Amazon, Alibaba, Aliexpress most of the manufacturer would sell and if now there will be the only middleman in between who imported the goods from the manufacturer. That way they make a bigger profit as well as pass on some of the saving to the customer. Yes, there are a bit of risk that you buying a product without looking/touching it and sometimes you do not get what you see in the picture – but hey! there are billions of transaction happening every day if that risk is that high this market won’t grow that much. Seriously! do you know Asos sell more products than all Mayer store combined in Australia every day? There are few places you can buy pretty much anything and these are my most favorite one:

Ebay.com.au (what do they sell: literally anything you can think of)

Aliexpress.com (what do they sell: literally anything you can think of)

Know where & what to buy for food & grocery

Firstly ‘what’: not sure if you ever noticed that you walked into a supermarket to buy milk & bread, should be = $6, right? But at the checkout, you are paying $15, why? Because on the way you also picked up some chocolate, two bottles of drinks & a cake. It’s a common dilemma and not completely your fault. Shop layout is designed that way and lot of research gone into that – so that it can lure you buy the stuff you don’t really need. Have you noticed milk & bread always would be in the last aisle, sugar & salt will be on the bottom corner of the shelf? On the other hand cholate & small toys will be at the front of the shop. That’s the shopkeepers trick they follow (in marketing terms its staple product vs impulse product) and to avoid the trap always come with a list of things you need from the shop and just stick to that. More effective method – reduce the number of time spend of the shop/reduce the number of the run to shop to max once a week i.e. plan ahead and only buy everything you need at one go.

Secondly ‘where’: vegetables are 30% cheaper in Sydney market or Parklea market. Chicken is 50% cheaper at factory outlets. There is always a place around you no matter which side of the town you live who is 20%-30%-40% cheaper than your large supermarket. Most of the time they won’t be at the most convenient location all time and half the time you can’t buy really small quantity for sure. A lot of the time I plan ahead and only buy once in every couple of weeks.

Lastly ‘when’: I had a convenience store/grocery shop in Sydney and once think I realized that when Big supermarket (Woollies, Coles, Aldi) give there 50% sale of certain product – that is the cheapest price you ever going to get. Even large wholesaler can’t do that price. I also figured out there is a cycle of those sales, so there will always be a sale on A, B, C, product in a year. If you track it closely then you would know as well then what frequency they give sale on certain things. So wait for the sale & stock up for the year when a sale comes!

Savings: $2000 (Assumed spend per year: $10,000)

Holiday booking – plan ahead

As time goes by and travel date comes closure the price of Flights, hotel, car everything goes up drastically. Sometimes you would be paying 100% more if you are buying the ticket at the last moment. For example, if you buy the December ticket before march-April of the year you still paying only the normal price to compare to if you buy in November you will be paying 120%-150% more. A lot of people just assume the tickets in the holiday season is more – not true, not more if you buy an ahead (I meant a year ahead).

Another holiday trick to follow is: do not go to holiday on holiday season/time. If you don’t have kids & their school etc. then why do you have to go to holiday in December or during the school holiday? Work in December and go holiday in mid-year. I have seen people taken holiday on mid-year and buy tickets year ahead. Went to Japan on $500 return (JAL), LA $700 return (Qantas), NZ $300 – you get the idea, it can be really cheap at least 30-40% cheaper on hotel and flights.

Savings: $1500 (Assumed spend per year: $5,000)

Review your insurance, phone, utilities

Easiest savings of all and yet most people don’t do this. Just save one day a year when you will review all your insurance, phone bills, utilities etc. and compare with the other service provided. Electricity is electricity there is not much about quality there so whoever provide the cheapest is the best is my take on. And year on year these change. Origin Australia cheapest one year not really mean they will be forever. And there are heaps of comparison sites today where you can compare all the provided together.

Savings: $500 (Assumed spend per year: $5,500)

Little bit of planning takes it a long way

Planning with everything. A Little bit of planning with everything take it a long way and in your savings bucket as well. For example – you going to West Sydney today for your son’s Chinese class for 1 hour – perfect time for your grocery run, you are time bound, saving another trip (car fuel, time, energy) especially for a grocery shop. You are going to a friend’s place at Lakemba – perfect time to pick up the meat supply for the month – cheapest meat in town, save another 60km car run, most importantly you are time bound and don’t have time to impulse buy.

About the author: My name is Shahnewaz Khan (www.iyahive.com; tamal_khan at hotmail.com). I am a Project manager at my day-job and have done fair a bit of post-grad study from Business school. I find there are a lot of processes of my day jobs and the theories and principles that I have learned at B-School can be applied to our everyday life. In my blog I write about those findings – please subscribe if you like to get regular updates.